For two decades, U.S. scientists and entrepreneurs pushed solar technology forward in labs like NREL and universities, but the early promise of an American solar manufacturing boom quickly fizzled. By 2005, China’s share of global solar-cell production was still in the single digits (about 7%). U.S. R&D and start-ups led on high-efficiency cells, but large-scale module and polysilicon plants were sparse. Federal support helped for a while, the 2009 stimulus’s Section 1603 grants, for example, covered 30% of new solar project costs but these programs were scheduled to expire by 2010. As grants ran out and investors cooled, many emerging American companies ran into trouble. A famous example was Solyndra, which had built up U.S. manufacturing capacity only to go bankrupt in 2011 amid a flood of cheaper panels. In short, the U.S. did most of the R&D early on, but then largely exited the mass-production stage.

Several factors converged as China surged ahead. China’s government made solar a strategic priority and poured subsidized capital into its industry. State-owned banks provided massive loans, for instance, in 2009 Yingli and Suntech secured multi-billion-dollar credit lines to expand factories while programs like “Golden Sun” offered 50–70% cost rebates for domestic solar projects. Cheap land, low-cost labor, and energy (mostly coal-fired) also drove down costs. As China added gigawatts of PV capacity, world supply outstripped demand and module prices crashed. In 2008–2011 alone, global wafer prices plunged by ~70%, cell prices by ~60%, and module prices by roughly half. By 2010, China’s output totaled around 10 GW nearly half of world production marking a remarkable rise from essentially nothing a few years prior. Low prices made solar installations more affordable, but they also crushed many Western manufacturers. The U.S. industry “almost disappeared” – 25 domestic firms closed between 2012 and 2017. In effect, China’s rapid scale-up (backed by aggressive industrial policy) drove a global supply glut that the rest of the world’s producers, including the U.S., could not compete with on price.

1. Early promise, early exit

In the early 2000s, America led solar R&D. U.S. labs and universities dominated efficiency research, for example, U.S. teams held many of the world-record solar cell efficiencies and American start-ups pioneered new thin-film concepts. Federal support helped too: the DOE’s labs program and tax credits fostered growth. But the U.S. never built a robust upstream supply chain. Most PV equipment still came from abroad. By 2005, China’s share of global cell production was only around 7%, with Europe and Japan accounting for the bulk.

Behind the scenes, however, U.S. support was waning. The 2009 stimulus had created a one-time boom, cash grants and tax incentives spurred thousands of MWs of projects but these incentives expired in 2010. (Indeed, by late 2010 projects had to be under construction to qualify.) With stimulus money drying up, VC funding slowed. U.S. panel makers found it hard to scale. SunPower and First Solar (mostly thin-film) held some niche markets, but neither could match the economies of scale China would soon achieve. By 2010, as federal grants ran off, the U.S. had only a few small wafer and cell factories, and no national policy driving onshore manufacturing. In short, America’s exit from subsidies and incentives left a vacuum just as others rushed in.

Meanwhile, China’s industry was preparing to explode. Starting in the mid-2000s, Chinese firms began ramping up polysilicon refineries and cell factories, often with government encouragement. For a time, domestic demand was small, but Chinese policymakers made exports a goal. The net result: Western incumbents found themselves competing with huge factories in Sichuan and Xinjiang that had lower capital costs and access to nearly free coal power. Customers worldwide began buying the cheaper panels even if they were made in China or its satellite factories. By 2010–11 China’s cheap panels had started to flood global markets.

2. China scales, prices crash

Once China committed to solar as a strategic industry, production capacity mushroomed. Between 2005 and 2010, Chinese polysilicon capacity roughly doubled and cell/module capacity soared in five-year economic plans. Major Chinese makers (Suntech, Yingli, Trina, JA Solar, etc.) built out large plants, often financed by state banks. Subsidies for domestic projects up to 70% for some large installations, it guaranteed a home market and helped developers absorb excess panels.

The result was global oversupply. With gigawatts of output coming on line and demand still catching up, module prices plummeted. Between 2008 and 2011, wafer prices fell about 70% and module prices by roughly half. Solar module costs dropped from around $4.50 per watt in 2000 to just $1.70/W by 2010. These steep declines made solar increasingly cost-competitive (good for deployment) but devastated manufacturers who couldn’t compete. Many European firms suffered similar fates, but U.S. players were hit too. Solyndra, once vaunted for its cylindrical modules couldn’t match silicon-panel prices and collapsed. 1366 Technologies (another U.S. start-up) struggled with cheap Chinese polysilicon flooding the market. Even First Solar, long the one U.S. mass-producer, had to shift its focus and eventually outsource some manufacturing.

In effect, Chinese scale created a classic “scale and sweep” cycle: cheap financing and subsidies enabled huge factories, which drove down costs, which drove down prices, which drove out higher-cost competitors. China ended the 2010s with a dominant position across the solar value chain.

3. 2016 pivot point

By the mid-2010s, China was utterly dominant. Solar factories were mostly in Asia: China’s share of global cell production had grown to over 60% by 2012 and was roughly three-quarters by 2016. Key materials became Chinese strengths too. By 2014–15, about 80% of polysilicon was made there so even if a panel was assembled elsewhere, many inputs were Chinese. In contrast, U.S. PV production had shrunk to a few assembly lines and niche players.

Meanwhile, the U.S. political climate shifted. The 2016 presidential election marked a turning point. Candidate Donald Trump campaigned on reviving coal and rolling back environmental regulations “bringing back an industry that was abandoned,” he said. He pledged to undo Obama-era clean-energy rules like the Clean Power Plan and to favor fossil fuels. After taking office, Trump moved quickly. He withdrew from the Paris Agreement, revived coal leasing on public lands, and slashed incentives: solar investment tax credits were allowed to begin stepping down. These moves removed much of the federal push for renewables just as global competition intensified.

Thus 2016 was a pivot: China’s solar momentum was accelerating even as U.S. policy was shifting backward. By the end of that year, China had quietly installed far more PV capacity than the U.S., and Chinese firms controlled nearly all the manufacturing machinery. In the U.S., the pipeline of large solar projects slowed somewhat amid policy uncertainty. The upshot was a widening gap: China was pouring money into new solar every year (investing $88 billion in renewables in 2016 alone), while U.S. progress depended almost entirely on state policies or remaining federal tax credits.

4. The dagger

The final blow came with trade policy. In January 2018, Trump imposed a 30% tariff on imported solar cells and modules (phasing down 5%/year for four years) under Section 201. The ostensible goal was to protect fledgling U.S. factories from the flood of cheap imports. But Chinese manufacturers reacted by shifting production to neighboring countries; 80% of panels sold in the U.S. still came from just four Asian nations (Malaysia, Cambodia, Thailand, Vietnam), many of them factories owned by Chinese firms.

The tariffs also had broader effects. U.S. installers simply had to pay more or delay projects. Analysts warned that the tariffs would slow solar adoption, and the Solar Energy Industries Association confirmed it: SEIA found that for every American manufacturing job “created” by the tariffs, about 31 other jobs were lost across the industry. In practice, that meant canceled projects and lost jobs in installation, sales, and maintenance. One SEIA report said the tariffs wiped out roughly 10.5 GW of planned deployments and cost some 62,000 jobs (vs. only a few thousand factory jobs gained). Prices for consumers also stayed higher; the U.S. panel market remained among the world’s priciest.

Meanwhile, China’s stranglehold grew stronger upstream. New factories kept coming in polysilicon, wafer and cell production. By the early 2020s, China’s share of polysilicon, ingot and wafer capacity would approach 95%, a near monopoly on the key inputs. In practical terms, by 2018 or so China was already the source of most solar-grade silicon and nearly all wafers. U.S. makers still had to import raw wafers and cells (even if they assembled panels here) because there simply was almost no domestic production of polysilicon.

In sum, by the late 2010s China had cornered the market. It not only produced most panels but also nearly all ingredients. Chinese firms like Jinko and Trina were global giants; Jinko even opened a U.S. plant in Jacksonville in 2018, though observers noted that investment was pre-planned and only marginally a “win” for U.S. manufacturing. Trade tensions escalated again in 2020s when the U.S. pursued anti-dumping cases against Chinese panels via Southeast Asia but the damage was done.

By 2024, China was installing a staggering share of global solar. China built roughly 329 GW in 2024 alone (over half of new solar worldwide). In total capacity terms, China now has nearly half of the world’s cumulative solar PV. The U.S., by contrast, has only a few hundred GW and remains heavily import-reliant. About 80% of panels used in the U.S. are imported. Put another way, despite decades of R&D prowess, America consumes mostly other countries’ solar panels.

5. Can the U.S. claw back?

Some recent policies aim to rebuild domestic solar supply. The 2022 Inflation Reduction Act (IRA) was a landmark shift: it poured tax breaks into clean-energy factories and projects. So far, companies have announced over $115 billion in new U.S. clean-energy manufacturing investments under the IRA. Specific credits (the 45X Manufacturing Tax Credit and expanded 48C grants) reward building cells, modules, and components onshore. For example, companies like First Solar, Qcells, and others have announced large U.S. factory expansions to tap these incentives. The IRA also includes domestic-content bonuses for solar projects and requires prevailing-wage construction, making U.S. panels more attractive in the lucrative tax-credit market.

These moves are helpful. U.S. module prices have come down thanks to some reshoring. Moreover, manufacturers argue that the IRA has rescued the “manufacturing credit” from being watered down. Several CEOs note that even a Trump administration left the unit-based manufacturing credit intact. If these factories run at scale, they could employ thousands of U.S. workers and supply some regional demand.

But big challenges remain. Chinese production costs are still lower. China can produce solar components at 10–20% lower cost than the U.S. or India, largely due to cheap electricity and scale. And global oversupply may continue unless demand soars. Even with incentives, U.S. factories face the risk of boom-bust; if installers buy mostly imports (which may remain cheaper), domestic plants may idle.

On the deployment side, the IRA’s tax credits have driven record U.S. demand: we are installing more solar than ever. But part of that demand is being met by imports or by foreign-owned factories in Mexico and Asia. A recent trade case alleged that 80% of “U.S. imports” come indirectly from Chinese companies via Southeast Asia. In response, the Commerce Department in 2024 launched investigations and interim tariffs on panels made in Malaysia, Thailand, Vietnam and Cambodia. The intent is to force companies to either use a lot of U.S. content or face duties.

For solar buyers and investors, the message is mixed. Supply is less risky than before, and U.S.-sourced panels now qualify for higher incentives. But global scale is still dominated by China. Some companies hedge by sourcing from Taiwan, South Korea, or even expanding thin-film technologies. Buyers might also lock in prices now in case new trade barriers arise.

For policymakers, the lesson is that industrial policy matters: China’s decades-long drive built today’s dominance. The U.S. is playing catch-up. The IRA shows how much money it takes to incentivize factories, but it remains to be seen if domestic content rules and subsidies can ever fully close the cost gap. Moreover, there are trade-offs: artificially high panel prices slow installations, which can delay climate goals and economic benefits of clean energy deployment.

Takeaways

The story of U.S.–China solar manufacturing underscores how leadership in innovation doesn’t guarantee leadership in production. U.S. labs and entrepreneurs sparked the solar era, but global-scale manufacturing followed policies and incentives. As costs fell worldwide thanks largely to China’s output, the U.S. market shifted to imports. Now, with new incentives on the table, the U.S. has a chance to grow manufacturing again but under the shadow of fierce competition. Investors and buyers must weigh the reliability benefits of U.S.-made content against higher costs, while policymakers must decide how far to protect domestic industry without slowing adoption.

Questions for the reader

Do import tariffs ever truly revive a domestic clean-tech supply chain, or do they mainly slow adoption?
Can strict domestic-content requirements overcome the sheer scale of global production?
How should solar project buyers hedge against sudden trade barriers or supply-chain shocks?

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